Chapter 11 bankruptcies in healthcare, including senior living reached a multiyear high in the first quarter of 2024. That’s according to the newest Polsinelli-TrBK Distress Indices Report, published Wednesday.
“We continue to see intense stress in senior living,” Jeremy R. Johnson, a bankruptcy and restructuring attorney at Polsinelli and co-author of the report, said in a press release issued in conjunction with the report. “We have seen several skilled nursing operators singing a similar refrain in the senior living space, with inflation, staffing issues, difficulty in providing profitable care in rural areas, and COVID, all putting pressure on operations.”
Polsinelli shareholder attorney David E. Gordon echoed these comments about senior living, which the report defined as independent living, assisted living, skilled nursing, memory care and CCRCs.
“Senior living hasn’t quite bounced back from the pandemic in the way that a lot of people predicted,” Gordon, who leads Polsinelli’s national distressed healthcare practice, counseling on business bankruptcies and insolvencies with a distinct focus on healthcare industry restructuring, told the McKnight’s Business Daily on Thursday. “While the lifting of covid restrictions has helped with occupancy, the increased and sustained cost of labor has weighed heavily on the industry. When you add to this the traditional headwinds of thin margins and stagnant reimbursement rates, the problems in senior living continue unabated.”
The Polsinelli-TrBK Distress Indices quarter report tracks the increase or decrease in all Chapter 11 filings with more than $1 million in assets since the fourth quarter of 2010. It includes both public and private companies, providing breakdowns of distress specifically in the real estate and healthcare services sectors.
Healthcare services bankruptcy filings represented 12.17% of all distress filings on a rolling four-quarter basis, the report noted. The data show the Health Care Services Distress Research Index was 913.33 for the first quarter of 2024, a 201-point increase over the preceding quarter. Since the first quarter of 2023, the Health Care Services Distress Research Index has increased 795 points.
“Compared with the benchmark period of the fourth quarter of 2010, it is up over 813 points,” according to the report. “This is the highest the Health Care Index has registered since the Indices started tracking the data 13 years ago, beating the previous highs from each of the last three quarters.”
The Southeast continues to outpace the rest of the country as the busiest region for bankruptcy filings, according to the report. The Southeast region reported 33.4% of the filings in the first quarter, followed by Northeast and Delaware at 30.8% and 16.1%, respectively. Since the benchmark period of 2020, the Northeast has shown the biggest increase in filings.
To access the full report, visit the Polsinelli-TrBK Distress Indices website.
